Former banker Gary Chua clues you in on what factors Malaysian bankers look at when considering whether to grant you a loan.



Yes, but don’t expect banks to loosen their lending criteria in future, says financing expert and former banker Gary Chua during a talk at MAREC ’17 (Malaysian Annual Real Estate Convention 2017 ) recently in Kuala Lumpur. “Why? The reality is the Malaysian lending market is still the most lenient in the world. Many other countries’ banking policies such as Singapore and Hong Kong are a lot more stringent than us. As our economy becomes more advanced, our banking lending system would become more like a developed nation meaning lending criteria would be stricter in future.”

Malaysians can still enjoy 90% margin financing for first 2 home loans whereas the Loan-to-Value (LTV) margin in other countries are lower. Good news: Despite the stricter criteria, you can still get a loan if you have the right knowledge. The following are 7 secrets Chua shared:


It’s a score engine that takes into account all your profile and total borrowings as well as history. Loan applications are now centralised at the banks’ headquarters credit department which depends heavily on your score. When you apply for a loan, you will fill up a form with information that the score engine captures and assign a score.

If you score well, you are eligible for the maximum margin i.e. 90% for first 2 loans and you will also get the best terms such as lower pricing/interest rate.

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There are ways of improving your score, for example, using an address in a more high end neighbourhood such as Damansara compared to an unpopular location such as Bukit Beruntung. Also, you get higher score for owning a house rather than just renting it as it indicates stability. Not many realise it but some credit officers even look at your photo in your identity card. So, change your card’s photo before applying for a loan.


If you are self-employed or have variable income with no EPF (Employees’ Provident Fund) deduction or never pay tax, the bank would need 6 months of your last bank statement to show proof of income. Ask the bank how much percentage of fluctuating income does it recognise. Some banks will slash half of your income in which case, chances of getting a loan is very slim.

Does the bank recognise tenancy income? It depends on how you present your rental income.

a. You must have a valid stamped tenancy agreement with a loan period longer than 6 months.

b. Ask the tenant to bank in rental for you (as proof).

c. The bank may ask for the to verify that you are the owner of that particular property.


All banks typically check your credit record with credit reporting agencies like CTOS and CCRIS (Central Credit Reference Information System). CCRIS contains information about all your credit facilities e.g. government education loan, overdraft, housing and car loans, etc. It doesn’t show information about your Fixed Deposit, current and savings account. If you miss one or 2 months’ payment, your credit score will be lower and the pricing may be higher.

a. Do not spend over 70% of your credit limit for each card. Also, the banks do not like it you have too many credit cards. Rule of thumb is if your net income is below RM10K, try not to have over 5 cards. If you have over 5 credit cards reflected in CCRIS report, you appear credit-hungry to the bank.

b. Do not make a habit of bad behaviour by missing payment or being late. What you need to do is pay only 5% of the outstanding amount on your credit card. By paying the minimum required amount, your credit score will be higher.

c. If you do not have any record in CCRIS, it’s not good for your credit score. Banks will be reluctant to give you a housing loan; even if they do, the maximum margin will be 80 – 85%. Reason is that they can’t see your track record. Hence, having zero CCRIS track record is 4 to 5 times worse than those with record.


a. If you always miss payment on your car loan (8 out of 10 would), that will drag down your score. 2 – 3-months late payment may cause the bank to reject your loan application.

b. Do not spend over your credit card limit.

c. When you are going to apply for your housing loan, do not apply for many other loans at the same time such as credit card, personal loan, etc.


If you enrol in a ‘payment holiday’ i.e. reschedule your loan payment, it would prolong the loan tenure and worse, banks will put an ‘S’ in your CCRIS. If any bank saw your ‘S’ status, they will straight-away reject your application. Similarly, if you restructure your bank loan to reduce your monthly instalment, you will get a ‘T’ status in your CCRIS which will automatically cause the banks to reject your loan. Also, try not to go into AKPK programme (a debt management programme overseen by the Central Bank) – it will take you a very long time to clear your debts. If a bank summons you, it will be reflected in your CCRIS; this is another straight rejection for your bank application.


f you have a bounced cheque more than twice in any 12-month period, the bank will also reject your loan application. And if it’s bounced over 2 times with the same bank, the bank may close your current account and you can’t open a new current account with this bank any more.


Formula used by the bank to calculate whether you can afford the repayment. To get a good DSR, you need to get the bank to recognise your maximum income.

Calculation: DSR = All commitments in CCRIS + new application / net income (after tax and EPF deduction)

The allowable percentage by bank is 60% if your net income is less than RM5K per month. If your income is over RM5K net, allow 70 – 90% for repayments depending on which bank. So, if your income is RM10K net, you can get total loans with monthly repayments of up to RM8K.[/ihc-hide-content]

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